Las Vegas goes all in on new 20,000-seat arena

HannahKarp

Many Las Vegas-area residents are hoping that the opening of the new 20,000-seat T-Mobile Arena on Wednesday portends the arrival of the city's first major-league sports team -- an odd absence in a flashy town that prides itself on entertainment.

Nearly as improbable, that team could be a member of the National Hockey League, which says it is weighing whether to base a new franchise in the desert city. Despite the uncertainty, about 13,000 people already have committed to buying season tickets.

Anschutz Entertainment Group and MGM Resorts International, however, didn't count on a pro sports league when they partnered to start constructing the $375 million arena two years ago in a former commercial area on the Strip between the New York-New York and Monte Carlo hotels and casinos that formerly housed MGM offices.

Instead, MGM says the arena development is expected to generate more than $900 million a year for the local economy even without an anchor tenant.

The O2, AEG's arena in London, which has no resident sports team, sold more tickets than any other similar venue world-wide last year, according to concert-industry publication Pollstar.

Major sports leagues have long steered clear of Las Vegas to avoid association with gamblers. The stigma, however, has faded as area's economy has grown beyond gambling. Nongaming draws such as hotels, high-end dining, trendy nightclubs and spas generated 58.4% of revenue in Clark County last year, while gambling generated 41.6% of revenues, according to the Las Vegas Convention and Visitors Authority.

The NHL's Los Angeles Kings, owned by AEG, began staging preseason games in Las Vegas nearly two decades ago, while the National Basketball Association hosted its All-Star Game there for the first time in 2007.

The T-Mobile Arena -- the area's first new arena in 20 years -- has so far booked more than 70 events, including this week's opening concerts by a recently reunited Guns N' Roses, and it expects to book 30 more by the end of the year. T-Mobile has signed a multiyear, multimillion-dollar deal with the developers.

The new venue features a nightclub at the top level that would hold up to 800 people, with triangular decks cantilevered over the stage for bird's-eye concert views. Should a team decide to call the arena home, it also has state-of-the-art locker rooms. Workers, however, are holding off painting them until June, when the NHL is expected to make a decision.

MGM also is spending $100 million to construct a desert-landscape park and 2-acre commercial zone called Toshiba Plaza around the arena, with shops, hotels, restaurants and a 5,000-seat theater that the companies hope will enliven the area.

Team or no team, AEG Chief Executive Dan Beckerman said in a recent interview, "the financial model works either way."

Las Vegas Mayor Carolyn Goodman has been rooting for a major-league team for years, and expects the arena to have a positive impact on the city and generate additional business, Jace Radke, a city spokesman, said Monday. The Strip is located in the town of Paradise, Nev., adjacent to Las Vegas, which both are located in Clark County. Officials there didn't respond to a request for comment.

AEG pioneered a similar approach in 2005 when it started building its own "entertainment district" around its Staples Center arena in then-desolate downtown Los Angeles. The sleek surrounding plaza, known as L.A. Live, has helped breathe life into the once-gritty neighborhood, with hotels, apartment buildings, restaurants and theaters. One difference: Two NBA teams and one NHL team call Staples home.

The closely held, 15-year-old AEG, which has its headquarters in L.A. Live, is building similar entertainment districts around its arenas in London and Berlin, helping its revenue grow by 30% and profits by 35% in the past three years, according to industry executives.

"Suddenly you had a vibrant area of a city, brought back from the dead," said Tom Wilson, president and CEO of Olympia Entertainment, which is developing a similar 50-block zone known as "District Detroit" around the future home of hockey's Detroit Red Wings. "It's all about putting feet on the ground."

AEG has been eyeing the Las Vegas area for years, but its first attempt to crack the market a decade ago went south as the global financial crisis began. Several months after announcing its arena plans at a news conference in 2007, AEG pulled out of the venture.

About three years ago the company tried again with MGM, which owns two of Las Vegas's old arenas, including the 16,800-seat MGM Grand Garden Arena inside its 22-year-old namesake casino. MGM knew that several of its competitors were looking to open a bigger, splashier venue than its own, and it resolved to beat them to the punch, said MGM Resorts President Bill Hornbuckle.

When Bill Foley -- a billionaire businessman and hockey buff who lives part time in Las Vegas -- learned about the arena plan, he quickly launched a bid to lure the NHL. Mr. Foley, who will have an equity stake in the arena if he wins the team, said it was relatively easy to get 13,000 season-ticket commitments, given the area's nearly 2 million-plus population, its wealth, its lack of a professional sport team, and the large number of transplants from chillier climates.

Mark Davis, owner of the NFL's Oakland Raiders, has been publicly exploring the idea of moving his team to Las Vegas, which wouldn't violate league rules. However, NFL relocations must be approved by 24 of the league's 32 members, and the proximity to legal gambling would be a factor that team owners would "have to understand," NFL Commissioner Roger Goodell said at a recent news conference.

An NBA spokesman said "expansion is not currently on our agenda," though former NBA player and developer Jackie Robinson is hoping to bring an NBA franchise to his own 23,000-seat All Net Resort and Arena. Demolition of this property -- which formerly was the site of a theme park -- about 5 miles away from the T-Mobile Arena began a few weeks ago. Construction is expected to be completed in 30 to 36 months, he said.

Gambling-related issues have been a concern for Major League Baseball, but the league hasn't studied the viability of the Las Vegas market in recent years. Only one club -- the Montreal Expos, which moved to Washington, D.C., in 2005 and became the Washington Nationals -- has relocated since 1972. The league hasn't expanded since 1998.

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